On June 6, President Biden announced a tariff exemption for solar panels imported from Cambodia, Malaysia, Thailand, and Vietnam. This announcement came in the form of a declaration of an emergency pursuant to Section 318(a) of the Tariff Act of 1930. Pursuant to this emergency declaration, the Secretary of Commerce, Gina Raimondo, may permit the importation of solar cells and modules from the four Southeast Asian countries free from the collection of duties and estimated antidumping or countervailing duties, if applicable. Biden notes in the emergency declaration that "solar energy is also critical to reducing our dependence on electricity produced by the burning of fossil fuels, which drives climate change," which the Department of Defense has recognized as a threat to U.S. national security.
The emergency declaration comes amid supply chain disruptions and the March 28, 2022, announcement of a Department of Commerce investigation into Chinese circumvention of anti-dumping rules, both of which have affected the U.S. solar industry in recent months. In conjunction with the suspension of tariffs, the White House will invoke the Defense Production Act of 1950 to "expand the domestic production capability for solar photovoltaic modules and module components" in order to "avert an industrial resource or critical technology item shortfall that would severely impair national defense capability."
This action may indicate the coming of more tariff reductions – or other trade-based solutions – in critical or strategic industries. Nevertheless, it demonstrates the difficult position of a trade agenda dealing with both China and climate change.
Co-Authored by Emilio Arteaga is a Jr. Partner at Vazquez Tercero & Zepeda law firm in Mexico City
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